The thinning out of the HD herd has finished today with Western Digital announcing it has snapped up Hitachi Global Storage Technology to the tune of $3.9bn and 25 million shares of Western Digital Corporation stock, worth another $0.9 billion.
From this cash-and-stock deal, Western Digital has now merged with Hitachi Global Storage Technologies, with the latter taking over ten percent of WD, and has created the world’s largest HDD manufacturer. This WD move leaves just Toshiba, Seagate and WD in place.
Western Digital has also shed some additional light on how much of its business it in fact passed on to Toshiba. Toshiba, will receive the blueprints to Hitachi’s one-, two- and three-platter 3.5-inch TB-per-platter, meaning 1TB through 3TB devices, as well as production and test equipment from WD.
The companies will continue to operate independently as separate brands. The merger will give the new Western Digital a strong foothold in enterprise storage, where it barely registered. According to last quarter data from IDC, this means the WD mothership will now account for 30 per cent of the enterprise HDD storage business.
According to the same report, in the 2.5-inch market, during the same period, the combined Hitachi and WD unit market share was 46 per cent of the market, while Seagate, WD’s largest competitor held just 23 per cent this particular market.
Despite having taken over Toshiba’s 2.5-inch operations in Thailand, WD states it will not guarantee the future of the fab, but for now it will be integrated into the WD Thailand structure.
Toshiba, jumping right into the 3.5-inch business will have units arrive faster than you’d expect, as Western Digital be providing contract manufacturing for Toshiba right away. Toshiba will also outsource the heads and media from WD. This is expected to last between 6 and 12 months.
Added up, both HDD manufacturers raked in over $15bn in revenues last year alone, and if not for the Thailand flood that knocked out Western Digital’s operations, the last quarter would have been a smackdown for the company.
Seagate, who has been very vocal about taking the lead in the "Flood Quarter", will need to take heed.This WD move leaves just three HDD players in place